As the deadline for the implementation of RDR comes ever closer, a number of issues have come to our attention as advisers finalise their plans for 1 January 2013 and beyond. Some of the more common themes emerging are providers’ readiness, decency levels, terms of business and the operation of the restricted and independent classification.
First, there is a need for greater clarity around product providers’ propositions. While we have seen some providers come out with statements about their plans for the post-RDR world, there are still many that have yet to provide any information to advisers. It is essential that providers communicate their plans for their product ranges and what charging structures they will support as soon as possible and thereby enable advisers to plan effectively for after 1 January 2013.
The subject of decency levels has led to concern among advisers. While Aifa accepts there are circumstances where they may be appropriate, there should be agreement about how they will operate in practice.
It has been suggested by some providers that they would contact clients direct. It seems clear to me that the product provider’s default position must be to contact the adviser, not their client. But advisers should be checking they understand, and are happy with, individual product providers’ plans in this respect.
Similarly, terms of business is another area that advisers will need to give attention to. We would expect that providers will need to reissue TOBAs to take account of the changes brought about by RDR. However, there is some evidence that providers are taking this opportunity to make other changes, not necessarily to the adviser’s advantage. Aifa will continue to monitor the situation but advisers will be well advised to pay close attention to what they are being asked to agree to.
One question that has led to some interesting debate among our members is whether it is possible to operate both a restricted and independent model within one firm. While there is consensus that this should be possible within the larger firms, the challenges of such an approach will be much greater for smaller firms. The FSA’s guidance on independent and restricted advice published in June addresses the disclosures that must be made if operating a dual offering model. A firm must be clear to clients the type of advice provided. A firm offering both types of advice cannot have the word independent in its name.
It is clear that there is still work to be done – by the FSA to clarify how the rules will work in practice, by the product providers to ensure they have made the necessary changes to their systems and by advisers to make sure they have all the pieces of the jigsaw in place by 31 December. Aifa will continue to facilitate dialogue between the FSA and its members. Our website is regularly updated with the latest news and our technical helpline on 020 7628 1827 is available for members who have queries about how best to get their business ready for the change.
Chris Hannant is policy director at Aifa